DTI eyes final sea freight forwarding rules by yearend

• The Department of Trade and Industry plans to finalize new sea freight forwarding rules within the year

• The proposed department administrative order sets minimum standards for recognizing freight forwarders

• It also introduces a Certificate of Recognition valid for five years from the current two-year validity of the Certificate of Accreditation

• The order aims to simplify processes, reducing documentary requirements from 22 to 5 and processing time from 7 to 3 days

• Entities must meet paid-up capital ranging from P1 million to P5 million, and maintain insurance coverage between P300,000 and P1 million

The Department of Trade and Industry (DTI) eyes final sea freight forwarding rules before the year is up, Undersecretary Mary Jean Pacheco told media after the public consultation on the proposed rules on December 6.

A proposed department administrative order (DAO) is set to establish minimum standards and requirements for recognizing freight forwarders while amending the obsolete Administrative Order (AO) No. 06-2005 of the defunct Philippine Shippers’ Bureau (PSB).

AO 06-2005, which outlines current rules on sea freight forwarding, was issued in 2005. Unlike other transport services regulated by the Department of Transportation, sea freight forwarders are accredited by DTI, formerly through PSB, which was dissolved in 2014.

The DAO seeks to replace the Certificate of Accreditation (COA) with a Certificate of Recognition (COR) for entities transporting goods by sea and/or land. The COR’s validity will extend to five years, longer than the current two-year COA validity.

Entities such as non-vessel operating common carriers (NVOCC), cargo consolidators, international and domestic freight forwarders (IFFs and DFFs), and breakbulk agents must obtain a COR before operating.

Pacheco noted that the DAO streamlines the application process, reducing documentary requirements from 22 to five and processing time from seven to three days.

One proposed change during the public consultation was maintaining three categories of freight forwarders instead of the proposed five, affecting paid-up capital requirements. The recommended capital amounts are as follows: P5 million for NVOCC, P3 million for IFF, and P1 million for DFF.

For companies applying for more than one category, the paid-up capital/equity requirement for the higher/highest category will be applied.

Notably under current rules, the minimum paid-up capital is required only for corporations and partnerships, specifically P4 million if an NVOCC, P2 million if an IFF, and P250,000 if a DFF.

The DAO will mandate proof of cargo insurance coverage, with minimum amounts unchanged: P1 million for NVOCC, P600,000 for IFF, and P300,000 for DFF. Key operating officers must undergo relevant training, with specified hours for IFFs and DFFs, along with at least three years of experience in shipping, freight forwarding, or related activities.

For those applying as NVOCC, the three-year freight forwarding experience must include training on consolidation of export cargoes.

Filing and processing fees for application will be increased to P12,500 for NVOCC; P10,000 for IFF; and P7,500 for DFF.

A recognized firm applying for an additional category will be charged a filing and processing fee of P3,500 for every additional category applied for. The validity period of the additional category certificate will be coterminous with that of the first recognized category.

A documentary stamp tax of P30 will still be charged per application regardless of the mode of issuance of the certificate.

No fee will be collected from the applicant for the COR issued and generated via the online system, while P500 will be charged for a hard copy.

Applications for recognition should be processed by DTI within three working days from receipt of complete requirements and payment of the filing fee.

The COR must be renewed within two months before expiration, with surcharges for late renewals. The DTI will exercise visitorial power to ensure compliance with the DAO and may enter establishments engaging in covered transactions.

The draft DAO outlines unlawful acts, including engaging in freight forwarding without recognition, misrepresentation, and failure to deliver cargo. A proposal during the consultation suggests changing this section to “grounds for revocation of accreditation.”

Complaints will be handled under DTI’s existing rules, and existing COAs under PSB AO 06-2005 will remain valid until expiry. Applications received before DAO’s effectivity will follow PSB AO 06-2005 criteria, while COR holders within a year post-DAO issuance must comply with prescribed capitalization requirements. – Roumina Pablo